Tuesday, October 04, 2011

American Manufacturing Renaissance: Ford To "In-Source" 12,000 Jobs from Mexico and China

Oct. 4 (Bloomberg) -- "Ford Motor Co. said it has committed to add 12,000 hourly jobs in its U.S. manufacturing plants by 2015 as part of a four-year tentative agreement with the United Auto Workers.

The figure includes 5,750 more UAW jobs than a previously announced 6,250 hourly positions to be added by the end of 2012, Executive Vice President John Fleming said at a news conference in Dearborn, Michigan. Ford will be “in-sourcing” jobs from Mexico, China and Japan, the company said in a statement. The union said it will release details later today.

The majority of the 12,000 jobs Ford is adding will be workers making entry-level wages, said Marcey Evans, a Ford spokeswoman. Wages for those so-called Tier-2 workers have started at about $14 an hour, half of what senior workers make.

The second-largest U.S. automaker earned $4.95 billion in the first half of the year, as fuel-efficient models like the Fiesta subcompact attracted buyers. Ford’s U.S. light-vehicle sales are up 11 percent this year through September, ahead of the industrywide gain of 10 percent.

Ford earned $9.28 billion in the past two calendar years after $30.1 billion in losses from 2006 through 2008. The automaker borrowed $23.4 billion in late 2006, putting up all major assets including its blue oval logo as collateral. That helped Ford avoid the bankruptcies and bailouts that befell the predecessors of GM and Auburn Hills, Michigan-based Chrysler."

Comments:

1. Of course, one of the main reasons for the 12,000 jobs being "in-sourced" to the U.S. from China and Mexico is the new 2-tiered wage structure that allows Ford to bring in new workers at a more competitive, realistic, market-based wage of $14 per hour. This increased domestic production and hiring is part of a trend that will continue as part of the renaissance of American manufacturing predicted by the Boston Consulting Group.

2. Ford lost money in 2006 (-$12.6 billion on sales of 2.73 million vehicles) and 2007 (-$2.7 billion on vehicle sales of 2.4 million). Ford is now profitable and earned $6.5 billion last year on sales of only 1.93 million units, and it made almost $5 billion in profits during the first half of this year on a sales pace about the same as last year. Greater cost efficiencies and lower labor costs have translated into higher profits for the automaker, despite unit sales that are almost 30% below the 2006 level.

It is a sad state of affairs when a business needs to go hat in hand to beg a union to let them hire more workers.

What may have started as reasonable protections for employees that want to organize representation for themselves to management has turned into a bloated, one sided evil behemoth that needs to be brought down. What we need is a federal right to work law, at minimum. Get people back to work!

Ford avoided BK partly because GM declared BK and the Treasury bailed out their mutual suppliers while GM took the public relations hit.

Ford's success was mainly out of desperation not to lose the company with the family name in a hostile takeover (research the heat the family took for that strategy at the time). I wish all the automotive companies who supply thousands of jobs to do well, but Ford's class B voting shares allowed the family to overrule what the majority of stockholders would have done. I think Mullaly has done an excellent job; however, luck and vanity was definitely on Ford's side.

"--the pig-headed conflating of true national strength with the exchange rate of the dollar--has caused untold damage to the USA manufacturing base.

You're absolutely right. The demand for dollars has kept the exchange right higher than it should have been for decades -- especially given the inflationary policies of the Fed. You said nothing that would dismay a "gold-nut".

What made you think you did? And what on God's earth would cause you to conflate "gold nuts" with the inflationists?

Actually, I don't care - that is the shareholder's problem. Excessive regulations over protecting labor associations (unions) is the bloated behemoth I was referring to. Are you claiming there are excessive government regulations protecting management? Puh-lease.

Bernie: "low paying manufacturing jobs you mean. But the executive compensation is still high."

Most manufacturing jobs these days are low paying, If you prefer that they be in the US, that's the way it must be. Executive comp high? That has nothing to do with the topic of in-sourcing jobs, and must just be something for you to throw out there to indicate your support of class envy.

Sean: "Wait, I thought sending jobs overseas was good? Or are we happy to have them here or there? Or just whatever the market decides we cheer?"

In case you're not sure how to feel about this,:) the correct answer is that we are happy to see jobs here and there. Wherever businesses can prosper, and improve our standard of living and well being.